Chapters 10 & 11 Marketing: Creating, Communicating and Delivering Value for Customers © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Introduction to Business

Marketing Unit, Slide No. 2 Learning Objectives 1.Define marketing in today’s business environment and how the role of marketing has evolved and continues to evolve. 2.Explain the five steps involved in the marketing process and explore the elements of each step, including: a.How marketers obtain insight into what consumers want b.The importance of a market-oriented mission statement; c.How to identify growth opportunities;

Marketing Unit, Slide No. 3 Learning Objectives (continued) d.How companies differentiate their products from their competitors’ products; e.How companies divide up their market into segments and decide which segment(s) to pursue; f.The tactics companies use to meet the needs of their customers and deliver value, that is, the 4 Ps of marketing—product, price, place (distribution), and promotion; g.The steps marketers take to build and maintain relationships with customers; and h.How companies receive value in return for their marketing efforts, beyond sales and profits.

Marketing Unit, Slide No. 4 Defining Marketing and The Marketing Process What Is Marketing?

Marketing Unit, Slide No. 5 Survey Results: Marketing Views The extent to which you agree/disagree with each statement (1 = “Strongly Disagree” and 7 = “Strongly Agree”)

Marketing Unit, Slide No. 6 Survey Results: Art vs. Science What percentage of marketing do you believe is art and what percentage do you believe is science?

Marketing Unit, Slide No. 7 Survey Results: Views About Advertising and Branding The extent to which you agree/disagree with each statement (1 = “Strongly Disagree” and 7 = “Strongly Agree”)

Marketing Unit, Slide No. 8 The Evolution of Marketing The Production Orientation -Focus is mainly internal—the firm’s operations—not on the customer. Attempt to lower costs by improving efficiency and creating economies of scale. “Make and sell” philosophy. -Ford was a leading proponent of this approach back in 1920s. Famous for saying, “Customers can have any color car they want, as long as it’s black.” -Might be appropriate in some situations, for example, highly competitive, price-sensitive industries. But in many instances does not meet customers’ needs and leaves firm vulnerable to firms that do.

Marketing Unit, Slide No. 9 The Evolution of Marketing (continued) The Sales Orientation -“Tell and sell, i.e., “advertise and sell,” philosophy. Persuading consumers that a product meets their needs and convincing them to buy it. -Focus is on large-scale, aggressive selling and promotion efforts to build high volume. Mass marketing., sell to everyone and anyone. -Generating transactions, rather than building long-term, profitable relationships. -Problems with this approach: Over-hyping can lead to lower customer satisfaction; and “Buying” higher market share through heavy sales promotion, i.e., discounting, and heavy spending on advertising can lead to lower profitability. For example, General Motors!

Marketing Unit, Slide No. 10 Where We Are Today: The Marketing Orientation -Achieving organizational goals, i.e., sales and profits, depends on knowing the needs of target market(s) and delivering the desired satisfaction better than competitors do. -Customer focus and value are the paths to sales and profits. Opposite of “make and sell” approach. Instead, find and make the right products for your customers. -And unlike the “tell and sell,” focus is on using all marketing tools, i.e., product, price, promotion, and distribution, and finding the right customers. The Evolution of Marketing (continued)

Marketing Unit, Slide No. 11 The Sales and Marketing Orientations Contrasted Figure 1.3 Another Distinction: Firms adhering to the selling orientation pursue anyone and everyone, and treat everyone the same way, i.e., use a one-size fits all approach. In contrast, firms following the marketing orientation, identify the best customers to pursue,. And instead of a one- size-fits-all approach, they typically divide the market into homogeneous segments and design a customized approach for each segment they pursue. Another Distinction: Firms adhering to the selling orientation pursue anyone and everyone, and treat everyone the same way, i.e., use a one-size fits all approach. In contrast, firms following the marketing orientation, identify the best customers to pursue,. And instead of a one- size-fits-all approach, they typically divide the market into homogeneous segments and design a customized approach for each segment they pursue.

Marketing Unit, Slide No. 12 Current Definition of Marketing Simple definition: -Marketing is managing profitable customer relationships. The twofold goal is to attract NEW customers by promising superior value, and keeping and growing CURRENT customers by delivering satisfaction. Expanded definition: -An organizational function and a set of processes for 1) creating, communicating, and delivering value to customers; and 2) managing customer relationships in ways that benefit the organization and its stakeholders. (Per the American Marketing Association, 2004.)

Marketing Unit, Slide No. 13 The Evolution of Marketing (continued) Where Marketing Is Heading: The Societal Marketing Orientation -The Marketing Orientation is often taken to mean, “Give the customer what he or she wants,” or “The customer is always right.” But what if the customer wants something that is not good for him or her, such as cigarettes or unhealthy food? -Or what if what the consumer wants isn’t harmful to him/her, but is not in the best interest of society, such as gas guzzling SUVs? -The Societal Marketing Orientation is a response to these concerns. This philosophy holds that marketing strategy should deliver value to customers in the short-term, in a way that maintains or improves the consumer’s and society’s long-term well-being.

Marketing Unit, Slide No. 14 The Societal Marketing Orientation: Balancing Competing Interests The AMA’s Newly Adopted Definition of Marketing (2008) “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” The AMA’s Newly Adopted Definition of Marketing (2008) “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”

Marketing Unit, Slide No. 15 Marketing involves a 5-step process for creating, communicating, and delivering value to customers, developing profitable relationships, and capturing value in return. The Marketing Process